By CL Jose
Operating income falls 35 pc to Rs735 cr; long pipeline of malls in offing
KOCHI/March 15-2022: The COVID pandemic has taken its toll on the reputed Lulu Group’s shopping mall business in India, with the mall major reporting a net loss of Rs100.5 crore for 2020-21 (FY21) against a net profit of Rs21.3 crore in the previous year.
(Lulu’s mall business in India is under Lulu International Shopping Malls Private Ltd or LISMPL and Kochi was the only major mall fully operational as of March 31, 2021)
Lulu saw its operating income plunge 34.42 per cent during the said period from Rs1298.2 crore to Rs734.5 crore. However, the leading rating agency, ICRA, has reaffirmed its BBB+ rating on the group’s loans, whereas the ‘outlook’ on most loans has been revised from ‘stable’ to ‘positive’.
The agency noted in its report that the various forms of discounts/waivers offered to tenants, reduction in sales at Lulu’s retail stores etc have adversely affected revenues and profitability of the group, especially in the first half (H1, FY2022) – from April to September.
Leasing, retail down
Along with the leasing division, the retail divisions were impacted in FY2021 (decline by 44 per cent) as well as in the first half (H1) of FY2022 by the Covid-19 pandemic.
However, ICRA noted, there has been recovery since September, 2021 (Q3 FY2022) with footfalls reaching 86 per cent of pre-Covid levels in November 2021 and retail sales surpassing the pre-Covid levels at the Kochi mall in November 2021.
In December 2021, the Lulu group announced an investment of Rs2,000 crore to set up a modern shopping mall near Ahmedabad. It also announced an investment of Rs500 crore to set up a food processing plant in Greater Noida, Uttar Pradesh. The company has also announced to set up 100 per cent export-oriented food and agri-produce processing park in Greater Noida.
Lulu Group, headed by Yusuffali MA, is said to have plans to construct 30-40 hypermarkets across the country in the long term. LISMPL or Lulu (in India) is part of the Lulu Group, headquartered in Abu Dhabi, with operations spread over three continents with vast experience in retail, commercial real estate and hospitality sectors.
Debt up 40 pc to Rs1990 cr
The debt availed towards the construction of malls and working capital requirements led to an increase in total debt (excluding lease liability) by about 40 per cent to Rs1,990.3 crore as on March 31, 2021 from Rs1,423.9 crore a year ago.
ICRA has observed that the recent sanction of a lease rental discounting (LRD) loan of Rs630 crore towards the operations of Kochi mall is likely to result in an increase in debt by 44 per cent as on March 31, 2022, leading to a high leverage.
The shopping mall in Edappilly, the first in the series in India, started operations on March 10, 2013 and its 5-star Deluxe hotel on December 21, 2014, and this marked the group’s entry into India.
In the newly operational malls – Bangaluru and Thiruvananthapuram, LISMPL has signed leases for around 55 per cent and 67 per cent of the total area as of December 2021 and is in various stages of lease tie-ups for a considerable portion of the remaining area.
